Azacitidine and its deoxy derivative are used in the treatment of myelodysplastic syndrome. These types of drugs were first synthesized in Czechoslovakia as potential chemotherapeutic agents for cancer. Conventional compositions of Azacitidine are available as powder product or as a solution of Azacitidine in water. Both these products have been associated with a number of toxicities when administered intravenously. To overcome these problems, in the present study, inclusion of Azacitidine in liposomal formulation has proved to be good approach to eliminate the toxicities and improve drug antitumor activity. We formulated Azacitidine liposomes containing Hydrogenated soy phosphatidylcholine, 1,2-Distearoyl-sn-glycero-3[Phospho-rac-(1-glycerol ) (Sodium Salt) [DSPG-Na] and Cholesterol by dried thin film hydration technique. Particle size analysis, zeta potential, %free drug are strongly affected by the different lipid concentration and result shown F5 formulation have the optimum % free drug, Particle size and F2 formulation shown highest Percent drug release when compared to the F4 & F5 formulations. The release kinetics of F2, F4 and F5 formulations were studied. All the formulations follow zero-order release kinetics and follow case-II transport when it applied to the Korsmeyer-Peppas model for the mechanism of drug release. The stability of the F2, F4 & F5 formulations were studied at 5±3oc and at room temperature for duration of 3 months. Hence it can be concluded that the liposomes along with Hydrogenated soy phosphatidylcholine, DSPG-Na and Cholesterol are suitable carriers for the preparation of Azacitidine liposomes.